HARSHA PRAVIN SHAH, THANE V. ITO - WD - 4(2), THANE

ITA 5818/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3368 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2005-2006
• Appeal Filed On: 08-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K BHOOPATHI
• Assessee Lawyers: N M PORWAL
• Keywords: Income from undisclosed sources
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI RAVISH SOOD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5818/MUM/2018 ASSESSMENT YEAR: 2005-06 HARSHA PRAVIN SHAH, C-201, SHAMBHAVNATH BUILDING, NEAR HAIN TEMPLE, VIRAR (W), THANE, MAHARASHTRA. VS. THE INCOME TAX OFFICER, WARD-4(2), THANE PAN NO. AADPS8397R ASSESSEE BY : SHRI N. M. PORWAL, AR REVENUE BY : SHRI K. BHOOPATHI, DR DATE OF HEARING : 13/11/2019 DATE OF PRONOUNCEMENT : 15/11/2019 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2005-06. THE APPEAL IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMBAI [IN SHORT CIT(A) ] AND ARISES OUT OF PENALTY LEVIED U/S. 271(1)(C) OF THE INCOME TAX AC T 1961, (THE ACT). THERE HAS BEEN A DELAY OF 14 DAYS ON THE PART OF TH E ASSESSEE IN FILING THE APPEAL BEFORE THE TRIBUNAL. HAVING GONE THROUGH THE AFFIDAVIT FILED BY THE ASSESSEE STATING THAT HER HUSBAND WAS CRITICALLY IL L DURING THE RELEVANT PERIOD, WE ARE CONVINCED THAT THE ASSESSEE HAD GENU INE DIFFICULTY IN FILING THIS APPEAL. THEREFORE, WE CONDONE THE DELAY OF 14 DAYS ON THE PART OF THE ASSESSEE IN FILING THE PRESENT APPEAL. APPELLANT RESPONDENT ITA 5818/MUM/2018/A.Y.2005-06 2 HARSHA PRAVIN SHAH 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A)-3 ERRED IN LEVYING PENALTY U/S. 271(1)(C) OF THE INCO ME TAX ACT, 1961 AT RS.1,18,777/-. 2. THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT TH E OMISSION OF ASSESSING OFFICER TO EXPLICITLY MENTION THAT PENALT Y PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF INACCURATE PA RTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER L IABLE FOR CANCELLATION. 3. THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT TH E PENALTY ORDER PASSED BY THE AO IS BARRED BY LIMITATION. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSMENT U/S.143(3) R.W.S 254 WAS PASSED BY THE ASSESSING OF FICER (AO) ON 20.03.2013 DETERMINING TOTAL INCOME AT RS.2,21,240/ -. THE AO FOUND THAT AS PER AIR INFORMATION U/S.285BA, THE ASSESSEE HAD CASH DEPOSITS TO THE TUNE OF RS.27,68,032/-. AS THERE WAS NO COMPLIANCE BY THE ASSESSEE, THE AO ADDED BACK THE ABOVE AMOUNT OF RS.27,68,032/-. A GAINST THE ABOVE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFO RE CIT(A) WHO REJECTED THE APPEAL. AGAINST THE SAID ORDER OF THE CIT(A), T HE ASSESSEE FILED AN APPEAL BEFORE TRIBUNAL. WE FIND THAT THE TRIBUNAL V IDE ORDER DATED 18.02.2011 DIRECTED THE AO TO MAKE THE ASSESSMENT A FRESH. DURING THE COURSE OF SET-ASIDE ASSESSMENT PROCEEDINGS, THE ASS ESSEE ADMITTED BEFORE THE AO THAT SHE DID NOT MAINTAIN BOOKS OF ACCOUNTS AND CLAIM THAT THE PROFIT MARGIN IS ONLY 1% TO 1.5% OF THE TURNOVER. T HE AO ESTIMATED THE PROFIT @8% OF RS.27,68,032/- WHICH COMES TO RS.2,21 ,440/- . THEREAFTER, THE AO LEVIED A PENALTY OF RS.1,18,777/- U/S. 271(1 )(C) OF THE ACT. 4. IN APPEAL, THE LD. CIT(A) DISMISSED THE APPEAL F ILED BY THE ASSESSEE ON THE GROUND THAT (I) CASH DEPOSIT OF RS.27,68,032 /- IS THE UNACCOUNTED ITA 5818/MUM/2018/A.Y.2005-06 3 HARSHA PRAVIN SHAH INCOME /DEPOSIT OF THE ASSESSEE, BECAUSE THE CASH D EPOSIT HAS NOT BEEN DECLARED IN THE RETURN OF INCOME AS THE APPELLANT H AS NOT FILED THE ORIGINAL RETURN OF INCOME AS REQUIRED BY THE ACT, (II) THE I NTENTION OF APPELLANT IS A DELIBERATE ATTEMPT TO EVADE TAX BECAUSE IN THIS CAS E HAD NOT BEEN TAKEN UP FOR SCRUTINY, THE ASSESSEE WOULD HAVE EVADED TAX TO THE EXTENT OF INCOME ASSESSED BY THE AO AND (III) THE ASSESSEE HA S NOT FILED APPEAL AGAINST THE ASSESSMENT ORDER, WHICH SHOWS THAT THE INCOME WAS CORRECTLY ASSESSED FROM THE UNACCOUNTED DEPOSITS/INCOME. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITS THAT THE APPELLANT HAD OFFERED A NET PROFIT OF 4 TO 5% ON TOTAL TURNOV ER OF RS.27,68,032/-, WHICH THEREAFTER WAS ESTIMATED BY THE AO AT FLAT RA TE OF 8% WHICH WORKS OUT TO RS.2,21,442/-. IT IS EXPLAINED THAT THOUGH T HE ASSESSEE HAD EARNED INCOME TO BE EXTENT OF 1% TO 1.5%, SHE HAD OFFERED FOR TAXATION IN THE RANGE OF 4 TO 5% BEFORE THE AO. SUBSEQUENTLY, THE A O INCREASED THE ESTIMATION TO A FLAT RATE OF 8% PURELY ON ESTIMATIO N BASIS. IN THIS REGARD, RELYING ON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN CIT V. SMT. K. MEENAKSHI KUTTY 258 ITR 494 (MAD.), THE LD. COUNSEL SUBMITS THAT IN A CASE WHERE THE INCOME HAS BEEN ARRIVED AT ON ESTIMA TE AND THE SAME IS HIGHER THAN THE ONE DISCLOSED BY THE ASSESSEE, PENA LTY CAN BE LEVIED U/S. 271(1)(C) OF THE ACT. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) SUBMITS THAT THE CASH DEPOSITS OF RS.27,68,032/- IS THE UNACCOUNTED INCOME/DEPOSIT OF THE ASSESSEE AND AS IT HAS NOT BE EN DISCLOSE IN THE RETURN OF INCOME, THE AO HAS RIGHTLY LEVIED A PENAL TY OF RS.1,18,777/- U/S.271(1)(C) OF THE ACT. ITA 5818/MUM/2018/A.Y.2005-06 4 HARSHA PRAVIN SHAH 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. AS MENTIONED EARLIER , THE AO DETERMINED INCOME U/S.143(3) R.W.S 254 AT RS.2,21,240/-. AS P ER THE AIR INFORMATION, THE ASSESSEE HAD CASH DEPOSITS OF RS.27,68,032/-. T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ABOVE ORDER OF THE AO WAS DISM ISSED BY THE CIT(A). IN FURTHER APPEAL, THE TRIBUNAL DIRECTED THE AO TO MAKE AN ORDER AFRESH. DURING THE COURSE OF SET-ASIDE ASSESSMENT PROCEEDIN GS, THE ASSESSEE ADMITTED THAT SHE DID NOT MAINTAIN BOOKS OF ACCOUNT S AND CLAIM THAT THE PROFIT MARGIN IS ONLY 1% TO 1.5% OF THE TURNOVER. A S THE PROFIT COULD NOT BE QUANTIFIED DUE TO NON-MAINTENANCE OF BOOKS OF AC COUNTS, THE AO ESTIMATED THE PROFIT @8% WHICH WORKS OUT TO RS.2,21 ,440/-. FINALLY THE AO LEVIED A PENALTY OF RS.1,18,777/- U/S.271(1)(C) OF THE ACT. IT IS WELL-SETTLED THAT PENALTY PROCEEDINGS ARE IN DEPENDENT AND SEPARATE. IN JAIN BROS V. UNION OF INDIA , (1970) 77 ITR 107, 116 (SC), IT IS HELD BY THE HONBLE SUPREME COURT THAT ALTHOUGH PEN ALTY HAS BEEN REGARDED AS AN ADDITIONAL TAX IN CERTAIN SENSE AND FOR CERTAIN PURPOSES, IT IS NOT POSSIBLE TO HOLD THAT PENALTY PROCEEDINGS AR E ESSENTIALLY A CONTINUATION OF THE PROCEEDINGS RELATING TO ASSESSM ENT WHERE A RETURN HAS BEEN FILED. IN THE INSTANT CASE, THE AO HAS SUMMARILY FOLLOWED THE ASSESSMENT ORDER AND LEVIED PENALTY U/S. 271(1)(C) FORGETTING THAT PENALTY PROCEEDINGS ARE INDEPENDENT AND SEPARATE. ALL THE MORE, THE PROFIT ARRIVED AT BY THE AO IN THE ASSESSMENT ORDER IS ON ESTIMATION. THEREFORE, WE DELETE THE PENALTY OF RS.1,18,777/- LEVIED BY TH E AO. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA 5818/MUM/2018/A.Y.2005-06 5 HARSHA PRAVIN SHAH ORDER PRONOUNCED IN THE OPEN COURT ON 15.11.2019 SD/- SD/- (RAVISH SOOD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 15/11/2019 SUBHANKAR, PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSISTANT REGISTRAR) ITAT, MUMBAI